Banks must abolish seven unfair charges – BoG

Dr Ernest Addison, BoG governor
Dr Ernest Addison, BoG governor

The Central Bank has warned commercial banks and specialised deposit-taking institutions (SDIs) in Ghana to abolish unfair charges in the banking sector.

In a statement, the Bank of Ghana noted that there are seven charges being implemented by banks and SDI’s which are deemed to be unfair, inappropriate and detrimental to the financial inclusion agenda and the protection of customers’ interest.

They are credit insurance premium overcharges, maintenance fees on savings account, over the counter (OTC) withdrawal charges, change of ownership of collateral documents, application of interest on penal charges, quotation of monthly interest rates on credit facilities and third party deposit/withdrawal violations

“The Bank of Ghana has observed with concern, a trend where some Banks and Specialized Deposit-Taking Institutions (SDIs) impose certain fees and charges on customers. These practices are deemed to be unfair, inappropriate and detrimental to the financial inclusion agenda and the protection of customers’ interest,” the statement.

For instance, on the maintenance fees on savings account the Bank of Ghana (BoG) said it “has noted that the application of such fees has driven a number of savings accounts into debit and in so doing, eroded the deposits of vulnerable depositors who would generally expect their savings accounts to earn interest.

“This practice is detrimental to financial inclusion and negates the gains of the financial literacy programmes geared towards promoting personal savings. Banks and SDIs are directed to desist from charging account Maintenance fees on savings accounts. This ban, however, does not include charges for services provided by banks and SDIs with the explicit prior subscription by customers.”

On credit insurance premium overcharges, the BoG said, “while the Bank of Ghana acknowledges the importance of this practice as a loss mitigating norm in credit management, a number of banks and SDIs take advantage, to overprice the premiums charged to customers, resulting in the increased cost of borrowing.

“Banks and SDIs are directed to desist from premium overcharges and to adhere strictly to the following: Banks and SDIs that opt to use their pre-determined insurance companies to underwrite borrowers’ loans, shall apply the same premium charged by the underwriting company to borrowers. 

BoG added, “Banks and SDIs are not permitted to retain insurance premiums collected from customers with the intention of implementing an internal insurance policy. This excludes commissions for bancassurance arrangements.”

Source: Daily Mail GH

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